Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — EEI Financial Conference 2019
39 slides from Public Service Enterprise's conference presentation, Nov 12, 2019
Slide 1: EEI Financial Conference
EEI Financial Conference • November 10 – 12, 2019 • NYSE: PEG •
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain of the matters discussed in this presentation about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical constitute “forwa
Slide 3: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings and, for PSEG Power, Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in addition to Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings and Ad
Slide 4: PSEG Strategy: Building a Sustainable, Financially Sound Energy Infrastructure Company
PSEG STRATEGY: BUILDING A SUSTAINABLE, FINANCIALLY SOUND ENERGY INFRASTRUCTURE COMPANY Newark, NJ 4
Slide 5: 7.5% - 8.5% CAGR
PSE&G Represents $0.08 Increase in ~ 75% of Non-GAAP Operating Indicative 2019 Earnings Guidance Common Dividend Member of Dow Jones Sustainability Index for 12 Years in a Row Promoting Sound Energy Policy 116 5–Year Investment Program Years Investing Provides Opportunity for in NJ’s Critical 7.5% -
Slide 6: A 116 year Newark-based business investing in critical energy infrastructure
A 116 year Newark-based business investing in critical energy infrastructure, providing safe and increasingly clean energy through two strong businesses Electric & Gas Distribution and Transmission Strategy: Investments in energy infrastructure and clean energy support reliability and customer expec
Slide 7: Investment Platform – sustainable over the long term
PSEG Investment Platform – sustainable over the long term 2019 – 2023 2024 and beyond 2014 - 2018 Upgrade aging Continued infrastructure infrastructure and investment – Gas System transmission Modernization Program Transmission (GSMP), Electric reliability and expansion Storm hardening and moderniza
Slide 8: Regulatory and Policy Initiatives - Update
Regulatory and Policy Initiatives - Update ES II Settlement PSE&G Energy Strong II (ES II) settlement approved by NJ Board of Public Utilities (NJBPU); Investment began Q4 2019 and extends through 2023 PSEG’s Priorities Aligned with New Jersey’s Clean Energy Agenda NJBPU approved the extension o
Slide 9: Climate Strategy – PSEG Power's fleet transformation is addressing climate change
Climate Strategy – PSEG Power’s fleet transformation is addressing climate change PSEG Generation Carbon Emission Intensity vs. PJM and USA (2005 - 2018) 1,400 PSEG's generation fleet continues to be much less 1,200 carbon intensive than PJM and USA averages CO2 Intensity (lbs/MWh) 1,000 Cleaner 800
Slide 10: PSEG is committed to real reductions in PSEG Power's CO2 intensity and emissions
PSEG is committed to real reductions in PSEG Power’s CO2 intensity and emissions and strengthening PSE&G’s system to withstand a climate challenged world PSEG is Powering Progress To find out more, visit www.pseg.com/poweringprogress Reducing CO2 Intensity/Emissions Clean Energy & Resiliency Governa
Slide 11: PSE&G – New Jersey's largest utility
PSE&G – New Jersey’s largest: • Electric and Gas Distribution utility • Transmission business • Investor in renewables and energy efficiency • Appliance service provider Electric Gas Customers 2.3 Million 1.8 Million 5-Year Annual Customer Growth* 0.7% 0.6% 41,889 2,630M PSE&G 2018 Rate Base 2018 El
Slide 12: Customer Focus – Customer bills have declined
Customer Focus – Customer bills have declined, supporting needed investment in the system Cost impact of approved and proposed programs GSMP II, ES II, and CEF over next five years ~2% annual increase, yielding flat bills in real terms NOTE: AVERAGE MONTHLY BILL FOR A TYPICAL RESIDENTIAL ELECTRIC CU
Slide 13: PSE&G's $12B - $14.5B investment program
PSE&G’s $12B - $14.5B investment program focused on reliability, resiliency, grid modernization and clean energy Over 90% of investment receiving contemporaneous 3,500 PSE&G Capital Spending or near-contemporaneous regulatory treatment 3,000 2,500 CEF 2,000 ($ Millions) 1,500 1,000 500 0 2019E 2020E
Slide 14: Investment program provides opportunity for ~7.5% - 8.5% rate base growth
Investment program provides opportunity for ~7.5% - 8.5% compound annual rate base growth 35,000 PSE&G Year-End Rate Base 30,000 8.5% - CEF 7.5% - 25,000 20,000 ($ Millions) 15,000 10,000 5,000 0 2018 2019E 2020E 2021E 2022E 2023E Transmission Electric Distribution Gas Distribution Clean Energy INCL
Slide 15: Energy Strong II: Recent settlement continues critical energy infrastructure program
Energy Strong II: Recent settlement continues critical energy infrastructure program Old Station Below/New Station Raised New Equipment Raised Above Flood Elevations Above Flood Elevations Old – Below Flood Level New – Above Flood Level • $842M total spending (Clause $692M, Stipulated Base $150M) ‒
Slide 16: Clean Energy Future program designed to achieve the goals of NJ's Clean Energy Act
Clean Energy Future program designed to achieve the goals of NJ’s Clean Energy Act ~$3.5 Billion, 6 year investment program filed in January 2019 providing cost-effective and innovative solutions supporting NJ’s clean energy goals • Energy Efficiency: Helps achieve the Clean Energy Act targets of 2%
Slide 17: Customer bills will remain in line with inflation
Customer bills will remain in line with inflation, even with inclusion of our active and proposed programs • Bills remained flat in real terms from 2016 to 2019, even with inclusion of GSMP I, ES I, 2018 Rate Case and ZECs • Over the next 5 years, the impact of GSMP II, ES II and proposed CEF progra
Slide 18: PSEG Long Island: Focused on improving customer service and reliability
PSEG Long Island: Focused on improving customer service and reliability while managing costs • Focused on safety, reliability, customer satisfaction and stakeholder relationships • 6th year of 12-year contract (with option to extend 8 years) • 2018: Earned $0.10 per share* Fixed fee of $65 Million
Slide 19: PSEG Power's generating assets mainly located in three competitive markets
PSEG Power’s generating assets mainly located in three competitive markets S S S S S S New York ISO S S S S S S S S S S S SS S Bethlehem Energy S Center (BEC) Bridgeport Harbor S S New Haven Kalaeloa S = Solar Yards Creek ISO New England Solar Source assets: • Solar (414 MWDC /325 MWAC) PJM Bergen K
Slide 20: PSEG Power's fleet transformed: more efficient and reduced carbon footprint
PSEG Power’s fleet transformed: more efficient and reduced carbon footprint Keys Energy Center - 761 MW Sewaren 7 - 538 MW Solar Assets - 38 MW Additions Peach Bottom EPU Uprate - 130 MW Peach Bottom MUR Uprate - 34 MW Bergen 2 AGP Uprate - 31 MW Kearny 13/14 - 267 MW Linden AGP Uprate - 63 MW Solar
Slide 21: Capacity markets provide a solid and continuing revenue stream
Capacity markets provide a solid and continuing revenue stream PJM’s RPM Auction Results* Delivery Year 2018/2019 2019/2020 2020/2021 2021/2022 PSEG Power’s Average Prices $205 $116 $179 $182 ($/MW-day) $165/$150 $100/$80 $77 $140 Rest of Pool Prices ($/MW-day) (CP/Base) (CP/Base) (CP) (CP) PSEG Pow
Slide 22: Potential investment in Ørsted's Ocean Wind
Potential investment in Ørsted’s Ocean Wind is aligned with New Jersey’s clean energy policy goals PSEG exercised an option to potentially acquire a 25% equity interest in the 1,100 MW Ocean Wind project Ocean Wind was the winner of New Jersey’s first offshore wind solicitation in June 2019 Th
Slide 23: PSEG has controlled O&M with actions focused on continuous improvement
PSEG has controlled O&M with actions focused on continuous improvement PSEG O&M Expense (1) 2014 – 2019E CAGR: (1.4%) $2,500 Cost control actions • Continued focus on $2,000 vendors to ensure maximum value ($ Millions) • Frequent organizational $1,500 reviews to drive efficiency and cost optimizatio
Slide 24: Power's free cash flow improves post CCGT construction
PSEG Power’s free cash flow improves post CCGT construction, increasing support of utility investments PSEG Power PSE&G 2019E – 2023E Capital Spending (1,2) 2019E – 2023E Capital Spending (1,3) $400 $3,500 $3,000 $300 $2,500 CEF ($ Millions) ($ Millions) $2,000 $200 $1,500 $1,000 $100 $500 $0 $0 201
Slide 25: Strategic focus continues to deliver solid results
Strategic focus continues to deliver solid results +4%** 2019E PSEG non-GAAP Operating Earnings per Share* Guidance $3.12 $3.20 – $3.30 $2.91 $2.90 $2.93 $2.76 $2.58 2013 2014 2015 2016 2017 2018 2019E *SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO NON-GAAP OPERATING EARNINGS. **BAS
Slide 26: Opportunity for consistent and sustainable dividend growth
Opportunity for consistent and sustainable dividend growth Annual Dividend Per Share PSE&G (2014-2019E CAGR: 4.9%) 2019 $2.40 Net Income Guidance PSE&G Range $2.20 EPS $2.00 $1.88* $1.80 $1.80 ($/Share) $1.72 $1.64 $1.60 $1.56 $1.48 $1.40 $1.20 $1.00 2014 2015 2016 2017 2018 2019E *INDICATIVE ANNUAL
Slide 27: PSEG Value Proposition
PSEG Value Proposition Operational Financial Disciplined Excellence Strength Investment • • • Excellence Assuring Aligned with in Balanced NJ’s Regulatory/ Results in Energy & Policy Regulatory/ Environmental Arena Policy Matters Goals • PSE&G – Delivering on promise for rate base growth through ali
Slide 28: PSEG Meeting Takeaways
PSEG Meeting Takeaways Regulatory & Policy Focus De-risks/Presents Opportunities Enhanced • Next distribution base rate case not required before year-end 2023 Stability, Risk • ZEC award preserves nuclear and supports stable gross margin Mitigated • Power fleet efficiency & geographic diversity impr
Slide 29: PSEG Financial Appendix
PSEG We make things work for you.
Slide 30: EPS Reconciliation – YTD 2019 versus YTD 2018
PSEG EPS Reconciliation – YTD 2019 versus YTD 2018 0.29 (0.17) $2.80 (0.04) $2.64 $2.56 $2.47 $2.44 ZECs 0.12 Interest Expense & $2.40 Transmission 0.13 Absence of One- Capacity (0.06) Time Investment Gas Margin 0.14 Re-contracting, Income $2.00 Electric Margin 0.04 Lower Cost to Serve (0.11) Weathe
Slide 31: PSEG – YTD Financial Results by Subsidiary
PSEG – YTD Financial Results by Subsidiary PSEG YTD EPS Summary – Nine Months ended September 30 Net Income/(Loss) 2019 2018 Change PSE&G $ 1.92 $ 1.63 $ 0.29 PSEG Power $ 0.61 $ 0.79 $ (0.18) PSEG Enterprise/Other $ (0.06) $ 0.02 $ (0.08) Total PSEG $ 2.47 $ 2.44 $ 0.03 Non-GAAP Operating Earnings*
Slide 32: PSEG 2019 Guidance - By Subsidiary
PSEG 2019 Guidance - By Subsidiary Segment Operating Earnings Guidance and Prior Results (non-GAAP, as noted)* $ Millions (except EPS) 2019E 2018 PSE&G $1,225 - $1,250 $1,067 PSEG Power (non-GAAP)* $395 - $420 $502 PSEG Enterprise/Other $5 $13 Operating Earnings (non-GAAP)* $1,625 - $1,675 $1,582 Op
Slide 33: PSEG Executive Profiles
PSEG We make things work for you.
Slide 34: Ralph Izzo
Ralph Izzo CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Ralph Izzo has been chairman and chief executive officer of Public Service Management. He is listed in numerous editions of Who’s Who and has Enterprise Group Incorporated (PSEG) since April 2007.
Slide 35: Daniel J. Cregg
Daniel J. Cregg EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED, PUBLIC SERVICE ELECTRIC AND GAS COMPANY, PSEG POWER LLC AND PSEG SERVICES CORPORATION Daniel J. Cregg has been executive vice president and chief financial modeling, with critical respo
Slide 36: Ralph A. LaRossa
Ralph A. LaRossa PRESIDENT AND CHIEF OPERATING OFFICER PSEG POWER Ralph A. LaRossa was elected president and chief operating officer Mr. LaRossa joined PSE&G in 1985 as an associate engineer and (COO) of PSEG’s merchant generation business, PSEG Power, advanced through a variety of management positi
Slide 37: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (Non-GAAP) Reconciliation Nine Months Ended Year Ended Reconciling Items September 30, December 31, 2019 2018 2018 2017 2016 2015 2014 2013 ($ millions, Unaudited) Net Income
Slide 38: Reconciliation of Non-GAAP Operating Earnings for PSE&G and PSEG Enterprise/Other
Reconciliation of Non-GAAP Operating Earnings for PSE&G and PSEG Enterprise/Other PSE&G Operating Earnings (Non-GAAP) Reconciliation Nine Months Ended Year Ended Reconciling Items September 30, December 31, 2019 2018 2018 2017 2016 2015 2014 2013 ($ millions, Unaudited) Net Income $ 974 $ 828 $ 1,06
Slide 39: Reconciliation of Non-GAAP Operating Earnings and Adjusted EBITDA for PSEG Power
Reconciliation of Non-GAAP Operating Earnings and Adjusted EBITDA for PSEG Power PSEG Power Operating Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) Reconciliation Nine Months Ended Year Ended Reconciling Items September 30, December 31, 2019 2018 2018 2017 2016 2015 2014 2013 ($ millions, Unaud
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